Headlines
This week saw the continuation of a more bearish price movements, after what has represented a largely suppressed wholesale pricing environment in the opening two months of 2024. Falling near-term gas contract prices set a lot of the bearish sentiment for downward trending wholesale prices in the week, and in turn, prompted power to follow suit. Recognising these price drops, day-ahead gas fell 13.6% to 59.63p/th, amid the continuation of warmer weather promoting lower heating demand. Day-ahead power fell 8.2% to £61.50/MWh, mirroring trends shown from its equivalent gas contract, and with notable reductions at the end of the week amid lower domestic demand forecasts for Monday. Subsequently, March 24 gas was down 9.8% at 60.50p/th, and April 24 gas decreased 10.4% to 60.10p/th. Elsewhere, all seasonal gas contracts lowered this week, up by 5.8% on average, with both summer 24 and winter 24 gas decreasing 8.8% and 6.6% respectively, falling to 62.00p/th and 76.00p/th. Moreover, all seasonal power contracts declined this week, down on average by 5.6%, with summer 24 and winter 24 retracting 6.5% and 6.3% respectively, falling to £57.75/MWh and £71.25/MWh.
Baseload electricity
Forward curve comparison
- Day-ahead power fell 8.2% to £61.5/MWh, with marginal losses across wind generation projections for Monday offset by lower demand forecasts. Further downward support came from periods of stable wind generation across the week, and losses across the carbon market.
- Likewise, March 24 power slipped 9.1% at £57.50/MWh and April 24 power decreased 8.5% to £56.75/MWh.
Annual October contract
- Q224 power moved 6.1% lower to £57.00/MWh.
- The annual April 24 contract lost 6.4% to £64.50/MWh, 56.1% lower than the same time last year (£147.00/MWh).
Peak electricity
Forward curve comparison
- Day-ahead peak power was down 16.3% to £79.50/MWh, following its baseload counterpart lower.
- March 24 peak power declined 9.3% at £63.65/MWh, and April 24 peak power decreased 6.1% to £62.00/MWh.
Annual October contract
- The annual April 24 peak power contract fell 6.5% to £73.88/MWh.
- This is 51.6% lower than the same time last year (152.75/MWh).
Seasonal power prices
Seasonal baseload power contracts
- All seasonal power contracts declined this week, down on average by 5.6%.
- Summer 24 power decreased 6.5% to £57.75/MWh, while winter 24 fell 6.3% to £71.25/MWh.
Seasonal peak power curve
- All seasonal peak power contracts declined this week, down 6.4% on average.
- Summer 24 and winter 24 peak power dropped 6.0% and 6.8% respectively, falling to £62.25/MWh and £85.50/MWh.
Commodity price movements
Oil and coal
- Opposing the recent bearish adjustment, Brent crude registered a week-on-week gain of 3.7% to average $82.07/bl, following a healthy demand growth forecast from OPEC and a strong drop in US fuel stock, in tandem with a weaker US dollar making the commodity cheaper for global buyers.
- Moreover, tensions in the Middle East continue to stoke supply disruption concerns.
- However, gains were limited by higher US interest rates – anticipated to reduce oil demand from the country, and higher global oil supply across the year, led by the US, Brazil, Guyana, and Canada as outlined in the IEA Oil Market Report.
- There is uncertainty in projecting the future of Brent crude due to the sensitive geopolitical situations surrounding it – such as the Middle East conflict, future Chinese demand, US inflation, and OPEC+ supply cuts.
Carbon (UK and EU ETS)
- Opposing the mixed price movements registered across the previous report, both carbon markets recorded losses, with EU ETS carbon dropping 8.2% to average €56.98/t, and UK ETS carbon trading 0.7% lower to average £35.65/t, supported by various bearish fundamentals.
- EU ETS prices continue to find support from reduced industrial power demand across the continent, and mild weather conditions, in tandem with lower gas prices. As a result, EU ETS prices fell to the lowest seen since August 2021 on 14 February at €55.95/t.
- UK ETS carbon experienced smaller week-on-week movements due to decreased wind generation on the system. This increased reliance on fossil-fueled forms of power generation, however above-average temperatures acted to limit overall domestic power demand.
- Prices in the future will likely decrease as European LNG regasification capacity improvements occur – minimising the requirement of gas-fired stations to meet demand.
Wholesale price snapshot – Friday-on Friday
